Gil Lithgow has had more than a decade of managing mission-critical IT projects to figure out why so many organisations fail to translate business objectives into successful outcomes. There's no doubt in his mind that when projects fail, cost far more than anticipated and cause endless ongoing headaches, it's usually because the organisation has no formal approach to project management.
It's a theory Lithgow is successfully proving yet again as he turns project management into a genuine corporate differentiator at Victorian organisation CitiPower where he took over as CIO in early 1999. His intervention to establish a Corporate Programme Office to bring projects into line - a process he's already fine-tuned in other organisations - has produced dramatic results.
Reporting to the Executive Programme Council, the Programme Office maximises use of resources, ensures stated benefits are delivered and significantly reduces the risk of late delivery. Introduced to manage all projects of a non-engineering nature, the Programme Office has already slashed duplication and caused the scrapping of hundreds of inessential projects.
Half-way through its three-year program it is helping project participants to focus on "getting it right from the start", has improved quality control and provided education and mentoring in project management skills. In time, once common financial processes have been implemented, it should also help CitiPower improve company-wide financial management and accounting processes to capture all project costs more accurately.
In the tougher environment facing all utilities, the benefits being achieved were sorely needed. Like many of its competitors in the new-look utilities marketplace, CitiPower faces unprecedented levels of uncertainty as the industry moves towards full retail contestability from January 1, 2001.
From its Melbourne head office, CitiPower provides electricity and other energy-related products and services to 250,000 residential, business and industrial customers in the Melbourne CBD and the city's inner suburbs. It also has offices in Sydney, Brisbane and Adelaide and is licensed to sell gas in NSW and Victoria.
A product of the 1994 break-up and subsequent privatisation of the State Electricity Commission of Victoria, CitiPower is struggling with issues of cultural change as long-term staff members learn how to operate in a commercial environment. It is weathering the complexities of several rapid changes in ownership in succession in an environment where competition is getting fiercer by the day. Meanwhile, the political climate is constantly changing; it has to come to terms with different regulatory regimes in each of the states in which it operates; and product innovation continues evolving as the organisation becomes more competitive and learns to understand the market better.
It all poses a life or death challenge CitiPower does not dare fail to meet.
"As an organisation," Lithgow says, "we have to become incredibly flexible at the same time as getting a new identity and culture and supporting that with tools and capability." It was clear to Lithgow when he joined CitiPower that the way in which projects were managed into the future would be critical to the success of the company's strategies in this new and vastly more demanding environment. That was a view readily endorsed by John Marshall, the new managing director and chief executive officer (CEO).
Lithgow's mission became to "implement a program management structure and methodology to ensure that all CitiPower projects are consistent with, and ensure the success of, CitiPower's strategic plans".
A February 1999 review of program governance and management found existing projects were neither aligned to the CitiPower vision and strategy nor managed across business functions. There was tracking of neither the progress of the project and its cost, nor were any project management methodology or processes in place. The success of any project was almost entirely dependent on the experience and skills of the individuals running it.
Worse, an initial project register of more than 300 projects in a company employing just 600 people showed not only just how confused definition of a project was but also demonstrated high levels of duplication of effort and lack of sponsorship. There was no doubt there was plenty of room for improvement in the relationship between project work and business objectives. Consistency would be imperative.
Been There, Done That
For Lithgow, the chaos was nothing unusual. After more than 30 years in IT exposed to projects of all sizes across industries including banking, insurance, electricity and gas, he'd had seen it all before.
"I was rather fortunate to have been project director for the building of all of the systems capability for a new retail bank in New Zealand in the late 1980s," Lithgow says. "That was perhaps my first experience with a complex project that had many different facets: from front office to back office; and every layer of technology, from networks to the applications that enabled the tellers to operate, including ATMs." Through that experience in particular, and in later years getting into even more mission-critical projects, it became apparent to Lithgow that many organisations did not have effective or formal or disciplined methods for translating a business objective into a successful outcome.
The inevitable results, he says, range from projects that fail to deliver the intended outcome because they lack quality in the implementation leading to project-cost overrun, to potentially many years of continued problems with poorly performing projects. In the IT area that inevitably means unnecessarily steep costs of ownership.
For the fifth or sixth time, Lithgow celebrated his entry to a new organisation by introducing a corporate-wide Programme Office structure designed to maximise use of resources, ensure stated benefits are delivered and reduce the risk of late delivery. By now, Lithgow says, he's got the process well honed. "I think it's an important part of a competent CIO's role to ensure the organisations they are responsible for have this as a core capability," he says.
The results, in CitiPower as elsewhere where Lithgow has done the job, have been dramatic. He has eliminated vast amounts of unnecessary activity while ensuring all new products fully support CitiPower's vision, strategy and business plans. Furthermore:- resources are now only be assigned to approved projects; - progress and financial status of projects are widely communicated; - projects are being delivered effectively into the organisation; - business benefits are being achieved and are measurable; - project managers are highly skilled and equipped to perform the role; - Key performance indicators (KPIs), job descriptions and career development plans reflect project management;- continuous improvement processes are in place; and - clarity of roles is leading to effective performance reviews.
Better still, that initial list of more than 300 projects has now been cut to just 80 after a process that is routine for Lithgow.
"The first step is to get them all logged," he says. "Then you can align them, by asking whether each one actually supports the vision and strategies. Once you get a list of those that do and those that don't, you can ask which are the ones that do give us the biggest bang for our buck and in what order?" At CitiPower, projects now wiped off the slate include planned upgrades to commercial systems that were already scheduled for replacement; and the planned $1 million purchase and installation of a PABX, whose sponsors apparently ignored the fact that CitiPower is already using Telstra's Virtual PABX service. Lithgow says most organisations without project controls are littered with such redundancies.
"A lot of people want to do projects because it makes their lot a little easier; yet if you actually looked at them in cold hard financial terms or customer service terms, quite a lot of projects just don't stack up. The classic one is spending $100,000 to do something that in four months I'm going to throw away." And he says it's hardly unusual to find organisations with no clear understanding of what their people are working on. "Inevitably you do a count of the actual projects that people think they're working on or want to work on, and you reach a number significantly higher than the organisation thinks it is.
"I've also discovered a lot of organisations typically don't understand how much they spend on IT. I've done exercises in three companies as an employee where my research has found that the IT spend is 30 or 40 or 50 per cent more than they thought. It gets hidden as people who are working in business units perform IT functions.
"The trick - especially in an organisation like CitiPower where you've got many different projects running concurrently - is to know at any one time where they're all tracking relative to your targets. So you want standard approaches for reporting. You want standard approaches to the way the projects are managed so you can move people from one project to another as requirements decree; and you want to know that those people will simply use the same approaches, no matter where they are working." Lithgow recommends that any organisation which is keen to improve its project environment starts by reviewing the current environment in order to determine whether this can be improved or needs wholesale replacement. If replacement seems the only option, the organisation needs to identify its vision, objectives and the requirements of project management in the organisation, and also recognise project management as a core business skill. He also says most organisations can benefit from employing experts in project management to recommend further improvements.
The Programme Office
Within the project management vision, everything the Programme Office does must support the overall strategy and business plans of the corporate vision. That's an absolute fundamental, says Lithgow, and one of the most important goals the Office is set up to achieve. Furthermore, business benefits must always be achieved and are always measured, and everything the Office does must be done right the first time.
"That way, you can assign your valuable resources to the projects that are approved and have been aligned to that vision," Lithgow says. "That's particularly true in today's world where people are working harder and having to work smarter. Most of our people have other responsibilities in addition to projects.
"If you are not disciplined, people will continually come up with great ideas that may have little relevance to that overall vision." Eventually, such discipline becomes a way of life, he says. "People come into the organisation, they are inducted, and they adopt the way of life of the organisation."There are currently project managers with a total of 28 years project management experience and a business analyst with experience as a process analyst and quality adviser working out of the Programme Office. When deployment of the project management framework is complete, only one project manager and one business analyst will remain in a consulting and operational role.
The Programme Office records decisions affecting the program of work and conveys these via a project communication procedure that ensures stakeholders and interested parties are kept informed of project information. It also reports up the line to the Executive Programme Council chaired by Lithgow and comprising the Executive Management Team (EMT), including the CEO.
The council directs the program of projects, weighs up risks and returns, sets priorities and monitors the delivery of their results. Each project proposal is discussed within the line and then with a member of the executive team. This ensures only those proposals worth considering in the current environment are tabled at the council. A member of the EMT presents the proposal to the council, which gives others visibility of the proposal and the opportunity to challenge.
Common procedures - applied throughout the life of a project, from project change control to status reporting - are defined in a standard format on the intranet. The framework includes job descriptions for all the roles that exist within the project management process. FAQs help ensure all CitiPower employees understand the prescribed project procedures.
A crucial project role is that of the business results manager: a delegate of the project advocate (sponsor) whose primary responsibility is to deliver the project outcomes whenever they are due. The business results manager helps the project manager define the business benefits that are anticipated from the project. When the project is completed those previously agreed benefits are transferred to the business results manager's personal KPIs.
Lithgow says some projects may have more than one business results manager, where the benefits are to be delivered in more than one operational area. The managers are involved in all significant decisions and approvals during the project life cycle.
Every time Lithgow introduces the Project Programme Office concept to an organisation there is resistance to overcome.
"There's always a period when you are building the capability and what people are seeing is bureaucracy - that's how they interpret it. It's not until [the concept] starts to actually help them deliver - which can be a long time - that [people] become more accepting," he says. "We're getting positive acceptance now; it's been just over a year and we've still got a long way to go. But I'm pleased with that. I typically would expect two-plus years." Lithgow says a significant part of overcoming resistance lies in making sure the CEO and every member of the executive team fully support the concept, both publicly and privately. It's an important qualification - he's known situations where executives express support in the executive room but then undermine it by telling staff members to ignore the process. At CitiPower, the CEO and his management team continually communicate their view of the importance of project management to all staff.
It's also a good idea to prevent the process from being perceived as exclusively an IT matter. To avoid this perception at CitiPower, the Programme Office focused heavily in the early stages on business customers and projects, which currently account for 80 per cent of the program's activity.
Progress on the Programme Office Initiative is now well under way. Lithgow says the way the concept has been introduced reflects his own views on the usefulness of project management methodologies.
"One could get shot down for saying this, but methodologies - particularly the ones that are marketed - tend to have grown up over many years and have become very sophisticated," he says. "There are [people who] attempt to use them verbatim. My view is it shouldn't be done that way. You should pick and choose the pieces that best match where you are at [a particular] time.
"There are idealists who are absolutely committed to something - if you've just been born, they want you up and walking and in a 100-metre dash in a short time. I have a different philosophy on life: let's crawl first. We've been doing that; and in the last month or so, with all the training and the rollout of the intranet and so forth, we're now walking.
"By next year we'll certainly be running."